The applicability of ambidextrous designs for service firms competing within stable external environments: the case study of an Australian accounting practice

Abstract

Increased computer power offered at ever decreasing cost is a hallmark of the twenty first century. In its wake product life cycles shorten and prime cash generators rapidly become obsolete from technology changes. Management teams confronted with the imminent loss of cash generating outputs are then compelled to develop replacements before life cycles end. New product comes out of exploratory activities that involve risk and failure. This conflicts with the efficiency and cost control required when managing capabilities exploiting mature products. Ambidextrous structures evolved to resolve the structural tensions and incompatibilities created by the simultaneous hosting of explore and exploit activities. Ambidextrous designs are primarily considered responses to external environmental dynamics. This thesis examines their application when external environments are stable and present no threat to an organisation’s core offer longevity. It considers two questions in relation to external environment stability and the possible application for ambidextrous designs. Can ambidextrous designs create strategic advantage opportunities for firms competing in environments not presenting existential threats to the life cycle of core offers? Does the absence of existential threat to the core offer develop negative conditions in internal environments preventing the integration of ambidextrous designs? The case study method was used to address the research questions. The case is a professional accounting practice delivering a core service not subject to threat of obsolescence. The research scope includes the analysis of the Australian professional accounting industry, i.e. the context in which the practice competes. The core offer of the practice is not differentiated from the competition and competitive advantage is derived from personal relationships. The inability to differentiate the core offer is found to create opportunity for enhancing competitive advantage by introducing supplementary services. The findings also show that although the core offer is stable, the competitive environment is possibly dynamic. The introduction of supplementary services provides a capability for defending market share if competition intensifies. The existing practice capability is monodextrous and unsuitable for hosting exploratory activities. An ambidextrous design offers a capability to overcome its incompatibility with new service development. This indicates that ambidextrous designs provide potential for facilitating added competitive advantage when conditions are stable. Notwithstanding this finding the practice revealed management attitudes that would obstruct ambidextrous design introduction. This demonstrates how a stable offer can condition management to focus on stability and security rather than choosing the uncertainties associated with new product development. The findings from the research therefore show that organisational ambidexterity has an application where it is not a response to existential threat. The use of ambidextrous designs in situations that are not a response to external dynamic risk is not widely acknowledged in the literature. The research also contributes to knowledge about the management role in the introduction of ambidextrous designs. It achieves this by identifying attitudes and behaviours that obstruct rather than nurture implementation, an area not extensively considered by the existing literature. Using the accounting practice as a case for study also contributes valuable insights regarding the nature of exploit capabilities and the way management teams respond in the absence of threats to core offer life cycles.